Barry, this is all very true. But I ask everyone, which of the 8 reforms, which included the liberalizations mentioned, have been implemented? Even the non-financial hukou reform has not moved forward in the 4-5 years since the 8 were proposed. Beijing is authoritarian, but in no less a grid lock than Washington.

I agree with most of what has been said here, but I think the author fails to mention the fact that China fundamentally has to change. All of the problems in their bank loans and everything fundamentally stems from their corrupt communist system that enriches plutocrats who has built their wealth through bribing government officials and engaging in unfair trade tactics, with many exceptions. This basically makes the whole nation and its institutions non-transparent, as well as their currency. Who knows how the value of the Yuan would change if some bad political events were to unfold, and why should anybody be concerned about this? This is why I believe Yuan will never be a true global currency unless the whole political system is brought down.

An American professor brushes off China's stated intention to replace the USD with SDRs?
In March 2009, in a speech entitled Reform the International Monetary System, Zhou Xiaochuan, the governor of the People's Bank of China came out in favour of Keynes's idea of a centrally managed global reserve currency. Dr Zhou argued that it was unfortunate that part of the reason for the Bretton Woods system breaking down was the failure to adopt Keynes's bancor. Dr Zhou said that national currencies were unsuitable for use as global reserve currencies as a result of the Triffin dilemma - the difficulty faced by reserve currency issuers in trying to simultaneously achieve their domestic monetary policy goals and meet other countries' demand for reserve currency. Dr Zhou proposed a gradual move towards increased use of IMF special drawing rights (SDRs) as a centrally managed global reserve currency.

They have the tiger by the tail. It's either continual development towards a typical mixed market economy and fine tuning in the face of crises as they occur or towards huge physically enforced repression of the masses if they try to wind back growing economic freedom

Barry Eichengreen advises China not to be distracted by its currency - renminbi (RMB) - joining the International Monetary Fund’s basket of elite currencies - dollar, euro, British pound, and Japanese yen. That RMB has been added is seen more politically than financially by China as "a matter of national pride" Apart from symbolising a milestone in China's modern history - its "emergence as a global power," it was also a vote of confidence in its economy. But authorities, including their central bank, the People’s Bank of China (PBOC), still have much work to do - "to strengthen domestic financial markets, modernize regulation, and streamline contract enforcement."
Even though China is now the fifth member of the special drawing rights (SDR) currency basket, and has "vindicated the government’s efforts" to persuade the use of RMB in international transactions, the author says, its inclusion in the SDR basket "has little practical significance." It remains to be seen whether the move will boost the RMB's desirability as a reserve currency for countries to draw, "when they borrow from the IMF."
There is no immediate fear that RMB would undermine the hegemony of the dollar as a global reserve currency, "freeing China and the rest of the world from over-dependence on the dollar," The author points out that "the PBOC’s renminbi swaps are almost entirely unused. Designated clearing banks have not exactly been flooded with business. Offshore renminbi bank deposits are falling. The proportion of China’s merchandise trade settled in renminbi has been declining since mid-2015." In August Poland became the first European state to issue renminbi debt in China, but there is "no sign" that "other governments will soon follow."
According to the author if China seeks to "transform the renminbi into a first-class global currency, it should pay less attention to renminbi trading in New York and the currency’s weight in the SDR basket, and more to the development of deep, liquid, and stable financial markets at home." Critics say China's stock market "has been on a rollercoaster," and had warned of "problems in its "corporate bond market." The heavy-handed government intervention in Chinese markets last year - from the currency devaluation to disallowing institutions from selling shares - could have dire implications for the institutions.
The author says it doesn't help that China loosens its tight grip on the management of the RMB, by relaxing capital controls and allowing financial capital to flow more freely in and out of the country. This would not encourage international investors "to up their game. "Companies will have to upgrade their accounting standards, and banks their risk-management practices, to cope with the faster pace of financial transactions. The result will be more liquid and stable financial markets, in turn making the renminbi more attractive as a unit of account, means of payment, and store of value for residents and foreigners alike."
The PBOC is going to come under immense pressure to be more transparent and improve its way of communicating with international markets. This requires massive cultural and procedural changes. Also, China will have to let the RMB be a freely usable currency and introduce a bunch of financial reforms. What is more essential is economic reforms like veering away from state capitalism to free market.﻿

While Barry recommends the PRC aim for all-grown-up "deep, liquid, and stable financial markets" domestically, there are small-'c' conspiracy theories around that, like China, most every other economic actor worldwide is so impaired by debt that when, for whatever inevitable reasons, the currently privileged USD is recognized as not all that extravagantly sound, and nobody else is feeling that well either, that the IMF will step in as the 'duly constituted' Capo di tutt'i capi and, Fed-style, print SDRs to paper things over. If only considered as a contingency, it would serve the PRC well to have accumulated both substantial bullion reserves, as it reportedly has, and to have a reserved seat on the SDR bus. The governor of the PBOC, Zhou Xiaochuan, wrote in 2009, “Special consideration should be given to giving the SDR a greater role. The SDR has the features and potential to act as a super-sovereign reserve currency.” Apparently, that old line about the Chinese term for 'crisis' being composed of the characters for 'danger' and 'opportunity' is mistaken, so I won't use it here. See: https://en.wikipedia.org/wiki/Chinese_word_for_%22crisis%22

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